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How to Identify Liquidity Zone in Gold XAUUSD Trading Easily


how to identify liquidity zones in gold trading XAUUSD

A liquidity zone is a specific area on a price chart where the market orders concentrate.


In this article, I will teach you how to identify the most significant liquidity zones on Gold XAUUSD chart beyond historical levels.



Liquidity Zones


First, in brief, let's discuss where liquidity concentrates.


Market liquidity concentrates on:


1. Psychological levels


psychological levels and liquidity zones gold

Above, you can see a clear concentration of liquidity around a 2500 psychological level on Gold price chart.


2. Fibonacci levels


fibonacci levels and liquidity zone gold

In the example above, we can see how 382 retracement of a major bullish impulse attracts market liquidity on Gold XAUUSD daily time frame.


3. Horizontal support and resistance levels and trend lines.


support and resistance levels and liquidity zones gold

In that case, an area based on a classic support/resistance level was a clear source of market liquidity on Gold.


premium liquidity zones trading gold

Significant Liquidity Zone


A significant liquidity zone will be the area where psychological levels, Fibonacci levels, horizontal support and resistance levels and trend lines match.


Please, note that such an area may combine the indicators, or any other technical tools.


Such zones can be easily found even beyond the historic levels.


liquidity zone beyond historic levels gold

Look at a price chart on Gold on a daily.

Though the market has just updated the ATH, we can spot the next potentially significant liquidity zone with technical analysis.


We see a perfect intersection of a rising trend line, 2600 psychological level based on round numbers and a Fibonacci extension confluence of 2 recent bullish impulses.


liquidity zone above all time high gold xauusd

These technical tools will compose a significant liquidity zone.


The idea is that Gold is currently rallying up because of the excess of demand on the market.

We will assume that selling orders will be placed within that liquidity zone and the excess of demand will be absorbed by the supply.


It will make the price AT LEAST stop growing and potentially will trigger a correctional movement.


Learn to recognize such liquidity zones, it will help you a lot in predicting Gold price movements.

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